I was thinking about this while going over a sectional of the Pacific Northwest, and thought I'd get some input here.

In looking over KBLI (Bellingham Int'l), I see that while the local facility resides in the US ADIZ, the airspace above it falls outside of it (Victoria Terminal and Vancouver Center cover the airspace).. So the local facility would fall under the FAA, while the airspace falls under CZVR. Correspondingly, phraseology at the Tower would come from the .65, while phraseology at the Terminal/TRACON and Center level would fall under the CAA.

Or does it? Would the Canadian controllers have to use US phraseology for arrivals coming into a US-based airport? Or does that line of demarcation extend all the way down to the local facility, causing KBLI tower to use Canadian phraseology?

How does that work when one country has control over the airspace for an airport in another country?

Whoever runs it uses there rules based on the facility you are talking to. So it would be NAV Canada handling the approach and enroute, so it would be their pharseology and once they switch you to the FAA tower you will get FAA .65 pharseology. This happens in Bermuda as well, it is british owned tower, with an FAA Center covering the enroute portion. So one difference you would notice is the Enroute controllers use inches of mercury for the pressure settings, and the tower/atis/metar all show in millibars as a QNH.